Ep 214 - Our 48 Unit Refinance - The Numbers

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast, which is called Freedom through Passive Income.

That's right. And welcome to another episode and this episode, this is a fun one because everyone who's been listening to our episodes and to previous podcasts, you know, we've always talked about this, our horror story, the 48 unit.

Right.

But we've been working on the refinance and this episode is entitled Our 48 Unit Refinance, the Numbers.

Yes, it is. Yeah. So a lot of people like to hear the numbers and understand what it looks like. I mean, even us, this is our first kind of full cycle deal where we bought it, rehabbed it, stabilized it, and then went through a refinance. So even us, this, the numbers are new. We didn't know what to expect for the refinance, closing costs. We didn't know what to expect for the mortgage payment, what the appraisal was coming in. We had our own assumptions. We've been in real estate for a long time. So of course we felt like we feel pretty good about what we're doing with partners and everything. And it turned out better than we actually anticipated in the end because we actually thought the full 56 unit was, would be on the high end where the 48 unit came in. So that was a true, true win. But anyways, we wanted to share it with you because a lot of people like to hear the kind of the behind the scene numbers so that you can see, hey, this is what they did. And not everybody shares the numbers, but that's what we're here for. So go ahead, flip. You wanna talk through it.

So in typical fashion, for those of you that if you've not listened to any of our podcasts before, let me tell you one thing real quickly. If you remember the Donnie and Marie show, do you remember that show?

No. Yeah, well, I mean, I know Donnie and Marie.

Yes. Yeah. You're a little bit country, I'm a little bit rock and roll.

Okay, right.

She's left brain, I'm right brain. And so here are the numbers. Our purchase price was $1,114,285.71. The acquisition closing cost was $4,749.86. And the renovation, this cracked me up, is $570,000. $530. So $570,530.15. So the all in for those of you keeping score at home is $1,689,565.72.

What? I had to figure it out. And when I figured out, I want the real numbers.

I'll give you 28 cents. Let's round it up to 5. 60 cents. So, but, but now the came in at 3.9 million.

Yeah, well, I haven't. The lender told us, I think we just got docs the other day with the appraisal in it, and so I'm sure it might not be an even 3.9 million. But he like did some backwards math and he goes, ooh, it looks like came in around at 3.9.

I was like, Bam. 3.9. $435.43.

Just 3.9 for now because I did not find the appraisal before this box.

So anyway, so the all in was just under 1.7, right? All in for the purchase renovation. Just under 1.7. The appraisal came in. Like you had said, we were hoping the 56 unit was going to be around 4 million.

Yes, well, we had that and that on. That was on the high end. We feel. We felt like it was going to be between 3 and 4 million once we are all said and done and that we would be all in around the 2.2.23 mark.

Right? Yeah, yeah. And so the appraisal on just the 48 unit came in at 3.9.

Yes.

So we're very happy.

Yeah, super, super excited. And. And for those of you. Somebody did Facebook message me and say, hey, you know, one of the cool things that you could do on, for those of us who do watch the YouTube videos is you can actually put like this information on there. Right. So, yeah, so as they're listening, they can actually see the numbers. So for those of you who are listening, Sorry, you're not gonna get that, but you actually got the numbers right here verbally. But the YouTube, I don't know how easy it is for you when you edit. You can just throw the numbers.

We'll have to tell the.

You're the editor.

We'll have to tell the guy that edits these.

He's right. So I'll take over for the next numbers. So our loan came in at 2,730,000. So after figuring that piece out, the appraisal and the loan amount, then we calculated the interest. How much interest did we pay our private money lenders on this deal?

This one, this one. I'm sorry, I interrupt when I read this number. That was. That's a big number.

That's a big number. We're actually doing a separate podcast just because of that number.

Yeah. Okay, so how much did we pay our private investors?

365,712 doll. And then our refinance costs without the prepaids. We took all prepaids out, which are taxes and insurance. Actual closing cost was $58,095.26. So now our new all in. After we add in the private money, lender interest or our investor interest, and then our refinance closing costs, our new all in is $2,113,373.94. But it's still appraised at 9.9 million. I wish it was 9.3 million. I was getting a little dyslexic there. So after our new all in, we still have almost $1.2 million in equity. The rest was distributed to us. So it was a total profit of $1,786,626.06.

That's a lot.

That's a lot.

And I believe I get the six cents.

That's all you get.

She gets the rest.

Because I invest, you spend. I ain't letting you spend.

She said don't spend all in one place.

Well, that's a nice thing. There is like almost 1.2 just locked up. Can't do anything with that. So that's a really nice thing. So the other numbers I did for you on this episode real quick are just some pictures of the gross income, right? Because we're talking about freedom through passive income. So our gross income, $35,000. Our average monthly expenses at this point in time now that stabilizes about 15,000. And as a general rule, 40 to 50% of your gross income is always going to be expenses. So this is right in line. So our new loan that we got is a 20 year term, 30 year am, 4.67% interest, 3 years interest only. And we have a step down prepayment penalty. So that's the summary of the passive income and the loan details. I thought you guys would be interested.

So the prepayment penalty means that we can't sell it?

No, we can.

We just have to pay.

We have to pay. Yeah, prepayment penalty. And so there's numerous. When you're doing a commercial loan and this is news to me because it's our first one, there's different prepayment penalty options. So when we talked to our partner, they suggested, hey, why don't you ask them for this one? And I think it's like 5, 5, 4, 4, 3, 3 2. So depending on how soon we potentially would sell. Now this is a long term hold for us, so we're not selling. But that's the prepayment penalty. Even if we do another refinance then in year three, let's just say after we do our three years of interest only, we want to refinance again because of the market or because of whatever reason we'd have to pay 5, 5, 4. So we're in the 4% prepayment penalty for that box. So that really forces you to take into consideration whether you're going to refinance because that's a big penalty. And in the loan documents I'm sitting there reading them. Thank that I hadn't read them because I told Flip I'm like in there going, I'm dying reading loan documents.

I can show the text message that said I am more than willing to come over and help you. But she knows how. I read legal documents. I read two words and went, oh.

This is boring or I don't understand any of that. So notwithstanding, hitherto anyways, I'm reading all of them and they literally talk about the pre penalty as a business. They're like, we are a business. We are loaning you money and we have this money to loan because we have other investors who loan to us. And that's how you build up all this money. Right? Well, they plan their business based on these loans and if you pay off their loan, well that just screwed up their business model because now they don't have that monthly payment that they are counting on. So they force you to pay a penalty in order for them to recapture and have enough time to do what they need to do. Obviously it doesn't say it like that in the loan documents, but I was like, oh, that really makes sense.

I believe that's called a restocking fee.

Sure. Anyways, we thought you would be interested in hearing the numbers behind the scenes because not everybody shares all these nitty gritty details with you. And we want to be very transparent with you because most of you are passive investors. You want to invest with us and we wanted to share with you our very first deal, transparently start to finish and what it looked like. And we're super excited how it turned out. And for those of you who are active investors now, you get to kind of see what an apartment deal looks like without actually having gone through what we did. You just saw, you know, a stitch in time. So this new deal may not have the same numbers or the bigger margins because you know when you get your deal, when you buy. Right. That's where it comes in. And this one was about a million dollars cheaper than Even our newest 48 unit. But our newest 48 unit is in a much nicer area, so there's lots of differences.

Stronger rents.

Yeah. Stronger rents. Yeah.

Yeah. Okay, awesome. Well, we hope that you enjoyed this episode. Make sure you're heading on over to our website, freedomcapitalinvestments.com and join Investor club. Yes, that way you can hear about all the deals that we're working on. And I don't think there's any. Any new deals lately because I haven't heard about them. Granted, I don't always hear about it anyway. But anyway, make sure you join the investor club. Make sure you're checking out the swag over there and also checking us out on Facebook, LinkedIn, YouTube, TikTok and all of the other ones.

That's right.

Even the ones that I don't even know about. That's how good we are. But we like to end all of our episodes with invest smart, live happy. Bye, everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss. Sam.